How to Break Into Private Equity – Straight from a 17-Year Veteran of the Industry

“Yup, everyone at business school still wants to do PE – even after the financial crisis, recession, and everything that followed.”

I was speaking with an MBA admissions consultant a few months ago, and she mentioned this point as if it were a surprise (that’s only true if you haven’t been reading this site…).

We’ve featured plenty of advice on how to get into private equity before, but today I wanted to do something different and ask a Partner at a fund for his tips on how to break in.

With almost 20 years of experience, he’s been through everything from frothy markets to recessions – and he can tell you exactly what the Partners at private equity firms who ultimately make the hiring decisions are really looking for, including:

The structure and hierarchy at a private equity firm and the different roles available

The PE landscape going forward

Story Time

Q: Let’s start with your background. How did you break into the industry and get to where you are today?

A: After graduating from college in the States, I worked in an American financial institution’s (FI) consulting division, helping the firm cover multinational corporations (MNC) in Asia.

I then transferred to Hong Kong within the same firm, and I was responsible for building and maintaining relationships with MNC customers in China.

After 2 years at the FI, I broke into PE in India through my own connections. I wanted to leave consulting, but leverage my consulting experience and work on the investment side doing direct investments.

Back then it was easy to make the transition because the Indian market was booming, and there were very few people with the skills to analyze and invest in companies and who could fit into the Indian language and also interact with MNC and global investors.

After 3 years at the PE firm in India, I was recruited back by the CFO of the FI I worked for to lead their PE arm and make investments on their behalf.

I spent 6 years there and focused on buying banks and finance companies. After my stint there, I went back to the States to get my MBA to rebrand myself because I was always known as the “FI guy” in my circle.

After finishing the degree, I was recruited by the Board of another FI to lead their PE arm and grow their P&L.

After one year there, the FI was sold to another bank and I moved to an Australian family office and private equity firm to help them build their Asian arm, hire multiple teams across Asia Pacific, and launch new funds.

I then decided to go out on my own and launch my own fund.

Q: Great. So what do you do at your fund and how do you spend your time?

A: I’m the Founder, Partner, and Chief Investment Officer (CIO) of my fund. I’m involved in capital raising and deal origination most of the time.

I also represent the face of the firm so I attend many events to meet people and market the firm.

My firm is an open-ended fund, so I spend around 40% of my time on capital raising, another 40% of my time on deal origination, and the last 20% of my time on attending events.

In terms of time spent between interacting with clients and reviewing deals, I’d also say that 70% of my time is spent dealing with external and internal clients, ranging from investors (LPs) to co-investors (other GPs) to investees.

The other 30% of my time is spent on reviewing deals, documents, drafting and legal matters. I review deals and transactions from beginning to end.

Q: How are the funds you worked for structured? And what are the relevant roles there?

A: In most PE firms there are two main divisions: “Investments” and “Operations.” Sometimes larger firms (over $10 billion USD AUM) have “Consulting” divisions as well.

The “Investments” division leads the investment process from origination to analysis to execution of deals; they usually focus on the deals and technical aspects and don’t know as much qualitatively about the industries they invest in.

In the “Operations” team, “Subject Experts” are hired from various industries to make sure the management team of each portfolio company can operate effectively, improve profitability, and so on. They worry about budgeting, forecasting, and any operational issues post-acquisition.

These “Subject Experts” tend to be executives from the industry with long track records of experience. They rarely come from the finance industry unless your firm happens to be acquiring financial services firms.

Education – Yes, being from a top school always gives you an advantage… let’s face it, it’s difficult to get into the best universities and business schools unless you’ve worked hard over an extended period.

Cultural Fit – It’s both important and irrational. One of my big investors is Australian, so I always have an Australian on my team to make him happy; another firm I know of only hires grads from Yale and Harvard.

Sometimes if I can find really, really good analysts/associates, I might be inclined to hire them and pay them a premium, because even at higher rates they’re still cheaper than VPs.

For Associate-level hires, candidates need to demonstrate that they can lead the due diligence process.

If I were to have an Investment Committee meeting tomorrow, would they know what to documents to prepare? Do they have strong project management skills?

I need someone who can hit the ground running when I hire him or her.

Q: Great… so what about mid-level and senior-level hires?

A: It depends on whether I’m looking for someone on the “Investments” side or the “Operations” side.

At the mid-level (VPs and Directors) on the “Investments” team, you need to demonstrate your ability to interface with clients, lead the due diligence process, and most importantly, lead and mentor others in the team.

The candidate should also be able to demonstrate his/her ability to do the first line of vetting – can the candidates vet the transaction before it gets reviewed by MDs and Partners to save them time?

I prefer someone with 7 to 10 years of experience in IB or/and PE for these types of roles.

On the other hand, if I’m hiring for the “Operations” team I would look for line managers, CFOs, and COOs of a business in the industry we’re investing in. I would also prefer someone with 7 to 10 years (or even more in some cases) experience in such industries.

At the senior level (MDs and above), I want someone who can demonstrate his/her ability to raise capital, originate deals, interface with clients of all levels (LPs, investees, other GPs) and represent the face of the fund. I want someone with 10 to 20 years of experience in IB/PE.

All of this comes down to a very simple rule of thumb: if you want to get hired in PE, you need to generate revenue or cut expenses.

This is not like a Fortune 500 company where you can just blend in, pretend you’re busy, and not do anything useful.

The more people we have, the lower the upside for the General Partners so I would rather not hire someone than hire the wrong person.

Q: It’s interesting that you said “IB or PE” experience above, because most people seem to think it’s impossible to move over if you’re already at the top in banking.

What about the MBA? How useful is it for PE?

A: It’s important if you want to reach the MD level or above since it gives you a solid network and more credibility, but don’t bother unless you can get into one of the top 10 schools worldwide.

I actually got my MBA because I realized that all PE firms greatly value pedigree, even if they’re smaller and not as well-known as the mega-funds.

If you want to work at a normal company or start your own business, an MBA is not as useful.

They can be somewhat helpful in finding good candidates, but individual recruiters matter a lot more than the firm itself (i.e. don’t assume the headhunter is good just because his/her firm has a good reputation).

Some headhunters are lazy and don’t filter CVs before sending them, or don’t verify candidates’ information well enough.

One time a headhunter presented a bunch of candidates who had all worked on the same deal, and who had all claimed to have performed the exact same tasks in the same role.

So we don’t rely on them 100% because of those types of problems.

Non-Ideal Experience?

Q: You’ve mentioned what you’d look for in the ideal candidate, but many readers aren’t in that position (i.e. they don’t have IB or PE experience, but they have worked for many years and now want to move into PE).

What should they do?

A: If you don’t get IB or PE experience early on, your next best bet is to work at one of our portfolio companies or another company in the industry and get experience running a line of business, and then join the “Operations” side of a PE firm.

I would not recommend going to other areas in finance such as sales & trading or asset management because they’re not relevant for PE and they might actually hurt your chances.

It’s better to learn something about an industry or real business, get to know the GPs at the firm that owns it, and then get your foot in the door like that.

An MBA is another option, but it wouldn’t be terribly helpful without transactional experience beforehand.

Q: What about fundraising? Can’t people with strong sales skills help PE firms fund-raise?

A: I do the fundraising myself. It’s challenging, if not impossible, for people without the relevant PE experience and seniority to do fund-raising.

Q: I see, so I guess you’re not meeting with too many potential investors in those “PE fundraising” roles that get advertised.

What about starting out in the back office of a PE firm and moving to the front office through there?

A: Unlikely. Your only chance there is lots of networking and getting to know the GPs very well.

Just like banks, PE firms also have “the back office” (administration, compliance, legal, accounting, HR, etc.) but more of the functions there are outsourced to 3rd parties and there’s less overhead than at banks.

So not only are there fewer roles, but there’s also less of a chance to interact with the investment staff.

A: We rarely hire people from these teams, because someone with IB/PE experience could do the same thing and if we really have a need for the skill set, we would just pay the Big 4 firm for their services.

You would want to move to the internal M&A team at a Big 4 firm if you’re in this position, because it’s easier to break in if you’ve worked on deals from start to finish.

Resumes, Interviews, and More: Got Deal Experience?

Q: Well, I guess that’s somewhat good news – at least you have more hope than someone in the back office!

Moving on, what about resumes? What matters specifically with deal experience, and what should candidates highlight on their resumes?

Did you find something in due diligence that led to your firm not doing the deal? Did you come up with a better capital structure that allowed the deal to progress?

In an ideal case, you can point to how you moved the deal forward, helped win a higher/lower price, or uncovered a red flag during due diligence.

If you don’t have anything like that, at least have a strong opinion on each deal you did: was it good or bad for both parties? Neutral? Something else?

Banking is all about process, but investing is more about thinking for yourself and making decisions on whether or not a deal is good or bad.

Q: Right. We already have quite a few articles and templates for PE resumes, so anyone reading should refer to those for some good examples… but that point you mentioned about having an opinion is very important, since you gloss over that many times on the sell-side.

What about the interview process itself? How does that work at your firm?

A: It takes me 4 months to hire someone given my team members’ travel schedules. After a candidate gets shortlisted from the first round, we want him/her to have at least another 4 interviews.

Depending on the level of the hire, the interviewers will be different. If I were hiring for an analyst, I’d have the associate interview him/her. If I were looking for a VP, I’d have a Director interview him/her.

For analysts and associates, I’d also ask them to send me previous models they built and teasers they drafted (with sensitive / confidential information removed, of course). I want to know if they know what to bring in to an investor committee meeting.

For senior-level hires, I would also ask them for their “Rodolex” of investors and their track record.

Q: I’m surprised people feel comfortable sending over models they’ve worked on, but I guess they are up against tough competition.

Fit / Background – Tell me about yourself, what are your end goals, how long will you be here, what motivates you, what are your strengths/weaknesses, and so on.

Market / Industry – What market do you find interesting? What industry should we invest in next and why? What’s something that everyone else likes but you don’t?

Technical – Similar to investment banking technical questions, but more of a focus on leveraged buyouts and calculating returns.

Deals and Clients – Walk me through a transaction you worked on, tell me about something you did that created value, tell me your specific role in the deal. Also, what would you do if an investment turned sour? If a past deal went bad, how would you fix it?

Case Studies and Modeling Tests – The main mistake candidates make here is focusing too much on technical details and not enough on their reasoning. Make sure you can tell the “story” around your case study first, and use your model to support your decision second.

Q: Great, thanks for those examples. It sounds similar to investment banking interviews and what we’ve already covered on private equity interviews, but the focus is on thinking like an investor.

What makes a candidate STAND OUT in terms of his/her story, interview & pitch? You must see tons of candidates from top schools and banks, so how do set yourself apart?

A: What was your value add? What did you differently? I want someone who could see opportunities that no one else could see, and who could then capitalize on those opportunities and generate revenue for the firm.

At the junior level, I want to know candidates’ thinking process. I want candidates who can save me money, have the ability to find value, and who can lead the DD process.

At the mid level, candidates should be able to demonstrate their ability to interface with clients and originate deals.

At the senior level, I prefer candidates who have a track record of originating deals, raising capital and making sound investment decisions. I also want to know his/her yield and ROI.

As you said, there are tons of people from top schools and banks who want to get into PE, but only the ones who can immediately add value and start generating revenue for us get in. That’s the only way to set yourself apart – a track record of results.

Going Forward: Private Iniquity?

Q: Going back to that quote from the MBA admissions consultant in the beginning, lots of people still think that PE is the “promised land.”

What do you think about its future prospects? Is everything shifting to Asia?

A: There is definitely a shift to Asia, and you’ll see more deal activity here versus the European region. With that said, China and India are not going to grow at 8-10% forever, and high inflation there is also a concern.

Valuations in China are high and the IPO markets are lackluster, so I wouldn’t say opportunities are stellar.

In India, few shareholders want to sell their companies, and many only sell 5%-15% of their stake, which is very little (somewhere around $50 million USD) for a PE firm.

Europe is going through a tough time, though I can see opportunities in large ticket deals (i.e. buying distressed firms on the cheap) and heavily leveraging them.

Q: Thanks for sharing your thoughts. Lots of people still think that there’s too much money chasing too few deals – do you think PE firms will change in the future to survive and innovate? Will fundraising change in any way?

A: Going forward, I believe PE firms will have to innovate by giving investors more liquidity after they invest.

Instead of locking up investors’ money for 7 years, GPs can shorten the lock-up period to three years and give investors the option to extend their investment period.

It is challenging to raise capital from LPs in this environment and you can see PE firms seeking alternative sources of capital raising. Even mega-funds such as Blackstone are seeking more liquidity in the capital markets.

Comments

Hello Brian, many thanks for this great article. Always amazed about all the info I can find on this website! I have a question (maybe a bit tricky) as I kind of have to make a important decision now and would like to know your opinion and thoughts on this one. Feel free to raise some issues as food of thoughts. I know the discussions and fights between BB and boutique banks but I want to raise this related to PE. It is super hard to get into PE and recently PE houses started hiring directly from business schools. For me, personally, I know that eventually I want to be in Growth Equity or Small-/Mid-Cap Buyouts in the DACH region. Not large-cap and no pure VC. From networking with analysts/associates I realised that those investment strategies rely a lot on mgmt consulting and less IB-modelling yet the big names still hire mainly from IB/PE but just because its headhunters ticking the boxes rather evaluating candidates purely on skills. Now considering that you outlined in this article that PE funds like to hire from IB but only somebody who can crack down on things from day one and also knowing that in this PE-strategy/-segment (Growth & small/mid-cap) there are some really big names and some super small boutiques, which of the two candidates do you think has a better chances to move to some global fund with a reputable name and make a career? (purely focused on Europe if of any relevance)

— Both candidates have a 3 years part time and 2 years full time experience from a global and well known Telecommunication company in strategic and financial roles and both have a Master in management + MSc in Finance from a top 5 europaen business school
— Candidate 1: 1-2 years IB in London (good name but low range of the tier 1 banks within top 10-15)
— Candidate 2: 1-2 years experience from a niche PE fund (Germany) focused on investments in growth equity & small/mid cap companies in B2B software solutions (Ticketsize of c. €5-20mio, ca. €400mio AUM of open funds only, 2 closed first-quantile funds with 25-30% IRR, 2 open funds in past 3 years and a lot of dry powder)

In the small PE fund it would mean that the candidate would have to take over responsibility for all the tasks from deal sourcing, building network, analysing investment opportunities, presenting to investment committee and apparently also working on due diligence and investment process inkl. potential negotiations. The IB guy however would get the Name on his CV and London IB experience but the transferable knowledge would not be by far at the level of candidate 2. Do you think it is worth taking the risk to go for the small, niche PE fund whose name is not yet well known or could it kill the chances to move to a bigger fund? Because everyone always talks about experience and knowing what you do but at the end if Headhunter makes proposals they always just tick boxes and it seams that no IB – no chance…Thank you a lot in advance and sorry for the super long post

Candidate #1 is still better off because of the name/reputation of the IB in London. Yes, some recruiters and professionals do care about your actual experience, but the entire finance industry is still very prestige/status-driven. Candidate #1 also has better downside protection in case he changes his mind in the future because it’s easier to go to normal companies and non-finance roles from a large bank than it is from a niche PE fund. A lot of people outside the industry don’t even know what “private equity” means, let alone the names of specific firms, while everyone knows the names of the big banks.

Thanks for the article – appreciate all of the content you put up. I’m looking to figure out my best route into PE or growth equity – can range from smaller to mega funds. My background is in commercial banking for 4 years before moving to Corp Dev/M&A for a Fortune 50 for the past 2 years. I’ll also finish my MBA next year from a top 20 school and will have 3 years of Corp Dev under my belt at the time of graduation.

What would be your recommendation for my next move if my ultimate goal is to get into a PE or growth equity? Move into another Corp Dev role with a more acquisitive appetite to increase transaction experience, move to an IB Associate role, move into a TAS consulting role with a big 4 firm, or continue working in Corp Dev at my current company (not super acquisitive – we only do about 4 deals a year)?

I’ve got a fairly extensive contact sheet of BB IB contacts I work with in my Corp Dev deals, as well as access to on campus recruiting and alumni network in IB; it’s the same for TAS positions as well. Unfortunately, I don’t have many contacts in PE at this point…

Your best move is to move into an IB Associate role if you can, though it will still be difficult to get into PE from there. Your second best option would be another corporate development role with more transaction experience. But to make any of this happen, you’ll have to start networking aggressively (and getting more PE contacts if you want to move in directly without doing either of the above).

HI Brian, how much the networking could make a difference if I come from a non-target background? Coz on one hand it’s emphasized about the networking and on the other hand there are a lot of articles stressing the transaction experience (which is really really hard to get if you don’t work at the related positions). Would love to hear your perspectives. Thanks.

It helps for some roles and not for others. You are not going to win a PE Associate position at Blackstone in NY solely through networking; you need the right school, GPA, bank name/experience, etc. But you can win offers at smaller/newer firms without much of a reputation yet if you network aggressively. And it can help with related opportunities like real estate, search funds, credit funds, etc.

What advice can you give for someone with M&A banking (analyst 3 yrs) experience from London and PE (associate 2 yrs) experience from continental Europe who wants to make a move to large cap fund in NYC? What to emphasize when no obvious local network or knowledge. One angle could be to join a firm with presence on both sides of Atlantic, but how do legacy-US firms view placing Europeans in US office? MBA another angle, but what age is too old for re-entry to PE at junior level? Thanks for any input!

You will not get into a large-cap fund in NY directly unless you are a 1st year IB analyst at a top bank there. Start at a smaller fund in the US, and network/transfer to different funds to advance your way up. And remember that your chances of getting into a large-cap fund are lower than being struck by lightning, so be prepared to accept smaller funds as well. Life is not an MMORPG. An MBA won’t help much if you already have all that experience.

Hi, how likely it is to break into real estate investment fund from the real estate investment advisor side (e.g.: JLL, DTZ Cushman&Wakefield…), saying the advisor role is mainly for financial modeling, pitch book preparation and due diligence?

hello, have a question. Would a career move from sales & trading with reasonable yrs experience & MBA from a top US university to PE be possible in general? Would it require to take a step back and become a junior at PE before growing there?

Great article – extremely informative, especially the thread on entry at multiple levels in the firm. This is one of the few articles that genuinely tackles what it takes to break into (not transition across) the space at a post-Analyst/Associate level.

That said, I do have a question about transitioning into PE from consulting firms. I understand that once you get past the Analyst/Associate level at consulting firms, most opportunities for ex-consultants are limited to operationally focused middle-market firms. I’ve spent a fair amount of time building up a “database” of sorts of operationally focused PE funds in my region – resources I’ve used include WSO, website, PEhub, and good old Google. Again, I want to ensure that I cast my net as broad as possible given my other limiting criteria. The answer to this is probably “no”, but I have to ask: is there any other resource out there that has a more comprehensive list of operational PE funds?

Your best resource is Capital IQ if you can gain access. We also have a list of ~10,000 private equity firms in the Networking Toolkit, but that list is based on online sources + databases such as Factset and Capital IQ, and it’s not always split by operational vs. non-operational firms.

How feasible is it to switch industry coverage from banking when transitioning to private equity? I work in the FIG group but want to move over to consumer coverage area. Do you have any advice on recruiting with such a background / how I will be looked at with no experience within the sector.

It can be challenging since FIG can be quite “niche” and moving to a consumer coverage area may require you to gain some knowledge/experience in consumer/retail. If you’ve had any experience in the industry it maybe an easier switch. Otherwise I’d try to gain some experience by reading up on the industry, taking on projects related to the industry, and network a lot.

I’ve been reading a few threads on WSO about coffee chats and networking sessions for PE that start in the summer. Would this start in the summer of your first year since that is when PE recruiting is? How do I get invited to these?

If I am not from a brand name school, is this going to put me at a huge disadvantage for PE recruiting? There are almost no alumni from my school in PE.

Yes if you aren’t from a target school this may be challenging, but I wouldn’t focus on this. I’d try to attend industry events. You’re a first year so you’re getting in the game very early. I’d suggest you to go to these events and learn as much as you can about the industry. In terms of networking, best if you have some IB/finance experience under your belt first

I don’t think this has been asked, at least in this forum. How hard is it to break into PE from sell-side research at a bulge bracket? Is my best chance trying to move internally to IB and then break out to PE eventually when I get some deals under my belt?

You can say that, though you can still try to network with GPs through PE events and see if any opportunities come up. I’m sure your valuation experience is valuable to PE funds; you just need a fund that is willing to give you a bit more support.

If you’ve had PE and IB experience, yes that maybe preferable, because they want people who can hit the ground running. If however, you were one of the top analysts and really understand the deal process, I don’t think you’d be at a terrible disadvantage. No many analysts go back to top business schools

So an MBA is not particularly useful for HF and AM? And do PE and VC firms strongly prefer their candidates to have an MBA when looking to promote employees from analyst to associate and from associate to mid-level? In other words, does having an MBA give junior people in PE and VC firms a big advantage in moving up the ladder over those who don’t?

The article mentions that it’s useful to have a MBA from top 10 universities. I will get mine from schools from say Cornell/Ross/Duke level, so I don’t think these are counted as top 10. In this way, is getting an MBA useless for PE recruiting?

How about for PE and hedge fund? Will I have any chance getting into a top PE/hedge fund for attending a top 15 program? Do you think it’s useful to connect with people from top PE/hedge fund if I am not from HBS/Wharton/Stanford/CBS and the like?

Yes it is always useful to connect with people from top PE/HFs if you can establish a solid connection here, even though you’re not from a top 5 business school. A top 15 can give you decent chance, though a top 5 would even be better.

I am so glad a stumbled upon this site. It is all so well written, and I really like the “Cost of Capital” web series. It was quite entertaining.

On to my question/comment… What is the likelihood of breaking into the PE field at the “Operations” level, without a pedigree background? I built an online gaming company in 1997 from scratch, ran it very successfully through 2010, sold it and retired. Then I sort of back into consulting in the online gaming space through referrals from my extensive network, and have been doing that to keep busy. Now I see tremendous opportunities in the Internet gaming market and some target companies that would make a great addition to PE’s portfolio, but I am not an analyst, I don’t do modeling… I don’t want to say I work on hunches, but more so I have the ability to see trends in the market before they become mainstream.

So my follow up question is, “Is there a need for someone with my skill set in the PE world?” I think my value add would be to spot and source deals, negotiate with the target companies, and help on the management consulting side of the portfolio companies. You can have a look at my bio at http://www.linkedin.com/in/peakmarketing

Just to add: yes, potentially you can get into PE, but you need to bring more to the table than just being able to predict trends. You don’t need to know modeling in-depth, but you do need to understand how to evaluate an investment, mitigate downside risk, and ultimately make a recommendation and drive the process forward.

The lack of a pedigree background is less of an issue than your current skill set… if you have a good network and a track record of operational success / turnarounds to point to, yes, potentially you can get into PE but it’s going to be tough because 1) It’s tough in general and 2) What you’re describing (online gaming) is more of an area that VCs invest in, so you’ll probably have more success there.

Brilliant article. Thanks for that. I am an Engineer and an IP/patents lawyer with a very strong interest in getting into private equity. I’ve worked on start-ups before. Was a founder in one for about 3 years – but sadly the venture flaked out. Working on another venture right now – pretty early but hoping for some traction soon. Was an Engineer for a few years (mobile, security/crypto, distributed systems, AI, etc.), and been doing patent law for about a year now.

Ideally, where I do want to end up is at a PE for a long term career. How shall I approach getting into the “Operations” side? FYI, I am almost in my mid-30s. Working on my PRM designation (Professional Risk Manager – variant of FRM – partially for general interest).

I’d suggest you to approach PE professionals and speak with them re. their roles and perhaps a potential role for you in their firm. Operations side – If you’ve been helping a corporate run its business for over 8 years or so a PE firm may potentially be interested in you if they’re working on a portfolio company in the same industry you’ve been in during that time. Many in PE stay and either start their fund, continue to be partners, or retire.

If I’m doing PE investment in the asset management team of a global insurance company (more like an in-house private equity fund which manages only the company’s own money), what are the odds for me to break into a PE fund?

i am a mom of a high school senior who is intersted in pursinng accounting/business in college. I found this article and the ensuing commentary, very informational as a novice reader starting to learn about the nuances of the business world. :0) Thanks.

I am about to complete my bachelor of commerce (finance and accounting major) and am thinking about a masters in finance before trying to break into private equity.
I live in Australia and i am contemplating what country i want to try to work. This brought me to ask if the longterm compensation working in PE in Australia could compete with that of overseas cities such as New York. Really my question is can you be paid well working in PE in Australia where we don’t have such big firms or am I better off working overseas?

I am not 100% sure, though yes I think there are more opportunities in cities like NY and there’s a chance that you maybe making more there, though I think it also depends on your background & region/industry of focus. Perhaps readers who’ve had experience working in both cities can give you better input!

Thank you for replying. I would love to stay in my home country but I am just worried that even if I get into PE and eventually make partner (if possible) my career and ability to make money will be held back by the smaller firms in Australia. Is it possible to earn big even if you aren’t with the TPG and Blackstone’s?

If various divisions within an investment bank (Capital Markets, Asset Management, Merchant Banking, Equity Research, Real Estate investing) focus on valuing and analyzing companies or at the very least investment opportunities, why are they not also considered stepping stones for PE jobs…surely Investment Banking is not the only route to take?

Because the work itself is different. Merchant banking/real estate investing (amongst those you listed) maybe more relevant. Some can be considered as stepping stones for PE jobs though you need to have that experience of doing deals to be appealing to PE firms. Otherwise, you’ll need to learn about an industry or real business to be appealing to PE.

Is this a good move to join a major PE fund outside the US as a post-MBA IBD associate with no pre-MBA banking experience? Although there’s virtually no buy-side exit opps for post-MBA IBD associate in the US, I can still join a major PE shop – KKR, TPG, Carlyle, for example, outside the US.

I’d want to come back to the US eventually, but I’m dying to get the solid buy-side experience, which is available only outside the US. (for people like me)

Please Advise!

How would PE shops in the US value a PE candidate with non-US PE experience (from THE major PE shop in Europe or Asia)?

For Example: Now, I’m a 29 year old post-MBA associate, will jump into KKR in Asia, then after a few years, will try to be back in the US for a senior associate position at any sized PE shop.

Would that be possible at all? Or would it be better off staying as a banker in the US with virtually no exit opps?

You can try to transfer back to the States after taking the PE stint in Asia, though this may be challenging because of differences in geographical focus and your citizenship status. Unless the PE shop in the US needs someone with Asian experience for cross-border deals (or other reasons), the shops may prefer someone with domestic experience because the markets are different, so it really depends on what the firm is looking for and what the role entails. If I were in your shoes, I’d choose the PE role in Asia first and find a way to move back to US. Thank you for reading my post!

I have a question about getting into PE with a non-IB/corporate finance background. I recently accepted a role with a small firm at their physical energy commodity trading desk. The role is more client facing/market research and less quantitative. We do hedge with derivatives but its very basic swaps to protect against price risk so financial technical knowledge is low. I went to school (one where BB’s recruit from) for finance and had a very hard time getting into IBD due to my low grades and I’d like to think, the economic climate (graduated last year). I did an SA position for a PE firm after graduation and really liked it and have decided that PE is something I want to eventually do.

With my current trajectory in physical trading, it does not seem likely that I will have a chance at joining PE at any junior levels because of my lack of deal experience. What would be a good step for me to take in the next 3-5 years to ensure I maximize my chances of joining a PE firm down the line? I’m thinking that I could continue to do this for 3 or 4 years and possibly go do an MBA? I understand that I might have a decent chance of joining at a more advisory level in PE with “industry knowledge” (so possibly a fund that focuses on the energy sector). Is there any other routes I can take?

Any thoughts on how I can leverage the above experience into PE or other positions in the finance space? A significant factor for my intention on eventually moving into PE or more banking related positions is money as the pay right now for me is quite low.

It may be a bit challenging for you to break into PE without the IB experience. With the above being said, you may be able to leverage your experience in commodities, move to a commodities company, run their operations for a few years, get an MBA, and move to a PE on their operational side (long path). You might also want to explore asset management companies.

I am a first year analyst at a mid-tier BB (Deutsche Bank/Merrill Lynch/Citi) IBD in London. I went to a top 25 liberal arts college in the US and graduated with a 3.4. I will try my best on the job for the next 1 year but just wanted to know 2 things:

– How much does my undergrad GPA put at a disadvantage – if at all? My ECs are stellar.

– What type of funds “realistically” should I target? I don’t want to concentrate my energy on the wrong things.

Thanks for your response. My only follow up questions or I should have said it before, does my undergrad GPA put me at a disadvantage with headhunters when it comes to PE recruiting? And when it comes to networking with headhunters, how does one impress them? Again, thank you for your time.

Generally they care much more about the brand name of your school than your GPA for PE recruiting. I’ve seen people put at a disadvantage for school name but not so much for GPA (within reason i.e. if you have a 2.5 you’re still screwed).

For the funds to target: focus on middle-market firms and avoid the mega-funds unless you’re confident you can be competitive there. I would focus on firms between $500MM and $5B in AUM.

If you have had operational experience (10+ years) in industries which the PE firm you are interested in has invested in/is interested in investing in, I believe your background maybe relevant. Speak to PE firms and get your name out there. Not sure if it is an easier area to break into though. Re opportunities to move up, I believe you should be able do so if you demonstrate your value.

I meant specifically at a PE firm, such as at Blackstne I know they have investment professionals who actually help decide on deals and portfolio operations who take over once the initial investment is made and implement any cost savings/management strategies

Do you have any insight into the mobility between these two divisions and the opportunities for investment v operations?

Your question is not that straightforward. In Asia, there are few operating partners & the teams have been dominated by the ‘deal doers’. Increasingly operations guys will have more importance, but at the moment few teams have this. In Europe, there was a separation between ‘operations’ and ‘investments’ with operating partners generally in an inferior role – but there are now some teams emerging which are a mix of the two (as equals). America is probably more advanced than Europe, but still currently dominated by finance types.

In practice, the bidding process requires teams that have investment experience to work with operations guys and debt specialists. The auction of deals is sufficiently competitive now that – in order to win – you need to (i) understand the industry, (ii) be able to bring some future gains through your operating know-how and (iii) optimise the debt terms. Whilst logically the roles within a team could be interchangeable, the reality is that firms encourage specialisation (and therefore inflexibility). What changes over time is the perceived value each role brings – and therefore the status & rewards. – From a 20-Year Old Veteran

If I were to be to be given a job acceptance offer for the Fall Analyst S&T Interviews this year, would it be possible for me to ARRIVE at the foreign city I am scheduled to work in, in mid-late July of the following year? (This assumes training would commence after the arrival.)

If you have been offered a FT offer, you might start work in early July depending on your team’s hiring needs. If you are going to arrive in mid-late Jul of that following year and you already have the offer on hand, I’d suggest you to speak to your team’s hiring manager and work something out

Don’t quite understand what you mean when you wrote “What about late April?”

What I mean is that, assuming you passed the Fall Analyst interviews (that are conducted Oct-Nov), would a Bank allow you to arrive in the City you are supposed to work in, in mid-late July of the next year?

I ask this b/c its my understanding that people who pass the Interviews in Oct.-Nov. arrive in the city they have to work in, in June of the next year. (as opposed to July). So basically, would they allow you to start working slightly late.

Secondly, would they be open to the idea of allowing you to start working slightly early, in say April.

Please see my last comment in response to your first and second question. I know that FA interviews are conducted from Oct-Nov. Some people start in June, others start in early July. When I first started work I postponed my starting date to mid July by speaking with my hiring manager

You’ll have to speak with HR and your hiring manager re your starting date, be it in April or July. Not quite sure about starting early.

May I suggest that you focus on a goal of producing 1 excellent article per day (by you or your staff). This will encourage daily repeat visits and increase loyalty in your following, and allow you to sell advertising at a higher rate. I check your site often but new articles arrive at random intervals and it would be great to see a new article reliably each morning. This is what you need to take this site to the next level.

Thanks! If this site were driven by display advertising, you’d be right about more content. However, we sell information products and coaching and so frequency doesn’t really matter (I’ve tested it before and it has about a 0.1% correlation to sales – in fact, sales *decrease* when posting is more frequent).

Producing one high-quality 3,000 – 4,000 word article per day would be close to impossible, though we do want to cover more areas in the future.

I actually send out more emails to our newsletter email list, so if you’re interested in receiving more frequent updates you should sign up for that. Only around 5-10% of the content we’ve produced over the years is publicly visible on this site.

I see what you mean. Putting too much on the site will discourage people from buying the book.

Since your site is very popular, I wonder if you would get a worthwhile ROI from click through ads on the site. Anther source of revenue could be embedded subtle advertising in articles (i.e. mentioning how great it is to work at GS is in an article in exchange for a few $). Perhaps you already do that? Not that there’s anything wrong with that, and you wouldn’t be the first.

Yeah, I really believe in focus above all else and minimizing clutter so advertising doesn’t interest me. There are a few links to Amazon products etc. but they make almost nothing compared to everything else. Sometimes you have to decide NOT to do something if it makes the experience worse, even if you could profit from it.

How would experience at a large AUM (>10 Billion) buy-side debt/mezzanine fund where an analyst is a part of the entire due diligence process and gets to build various models like LBO’s, look for PE? Although not as “prestigious” as BB IBanking, the work is done from an investor’s perspective which is more similar to a PE firm… Just wanted an opinion as this route rarely gets talked about.

I think the skill set you learn at a mezz fund would transfer well to PE fund – lots of cashflow modelling skills, biz model analysis, risk analysis, due diligence, deal execution. At the end of the day both are taking very similar risks and doing the same analysis, just a different level of control/payoff (ie mezz funds usually end up taking warrants as well and getting some board seats). Adding to the above, I don’t think its necessarily easier to find a job at a mezz fund than a PE fund though – in both fields you probably find lots of people with experience in leveraged finance at an investment bank

Depends on the type of fund… chances are lower at non-distressed/turnaround PE firms and higher if you focus on those. Coming from a HF it will be difficult without the M&A experience because they want people who know how deals and modeling work, so you need to get a lot of great deal experience in those 2 years to have a good shot.

Any advice for how a corporate lawyer in hk can break into PE in Asia? Better to break into IBD first or rebrand through an MBA? Some tell me the former option might not be fantastic as lawyers are typically staffed in execution teams and ECM deals (ie IPOs) and therefore not have the m&a experience that PE funds want.

In Asia, I don’t think you really need IB experience to get into PE at least if you work at a firm that’s focused on mainland China or other emerging markets. Going to IB first would be a step down most likely but someone else may be able to give better insight there.

I would just try to find a firm that specializes in an industry or area you have experience with and apply directly. An MBA is an expensive and time-consuming step so I wouldn’t recommend that right away. Keep in mind that when this interviewee did his degree, it was 15-20 years ago and schools were much cheaper.

How are VC firms in China? I got a internship at Shenzhen Capital group. On paper they seem to be doing amazing but from this article it seems to me PE firms are suffering. Are VC firms also suffering?

Sometimes you will have to prepare an investment memo or do something formal like that, in some cases it’s just a discussion. But in either case, you need to discuss the company overall, the market, the management team, products/services, financials, valuation, and potential returns and maybe bring along lender’s documents if you’re close to doing the deal.

There may be more than that as well – it really depends on the firm and how much process they like to use.

Brian, as always another great article! I currently work as an analyst at PE firm (in Australia) and by reading this article I have picked up on the few things that can be utilised going forward. I have really enjoyed the read and look forward to the next piece.

I would your opnion on something. If you were a candidate to a position in a firm, which required fluent Portuguese, would it be ok to send the CV/Resume in portuguese? I am asking that because i live in a portuguese speaking country, where 99.9% of the companies demand fluent english, and i was thinking about sending my CV in english instead of portuguese, but i do know whether the recruiters will think of me like a guy who likes to “show off”

Personally I would still send your CV in English because that’s usually the standard at finance firms. But I don’t think it matters either way as long as you note your language abilities at the bottom.

I was wondering what the prospects for breaking into PE on the investment side would be for those starting at management consulting firms after undergraduate studies. Clearly the finance experience, in terms of modeling and familiarity with relevant documents, would have to be made up later either through a lateral switch into IB or reinventing oneself after an MBA. That being said, some of the common shortcomings of traditional BB IB candidates mentioned in the article (e.g. inability to understand the story of the deal beyond the technical details, identifying profitable business models, and understanding how to find “fat” in a potential investment) may be less prevalent from a candidate with an MBB background.

It really depends on the firm – at some places it’s more common (i.e. Golden Gate Capital always hires heavily from Bain) – and also their strategy. You’re in a better position if they focus on turnarounds or operational improvements than if it’s a pure buyout shop that only does deals and gets returns via leverage. A lot of consultants do end up getting into PE, but they’re still less common than bankers.